Knowing China through Taiwan

Economy

ZTE continues to deny layoffs as staff become disillusioned

Staff Reporter

2013-02-26

11:45 (GMT+8)

A ZTE booth at an exhibition in Beijing. (Photo/CFP)

ZTE, one of China's top providers of telecommunications equipment and network solutions, will focus on streamlining its operations and reduce operating costs this year. Its employees hope the measures will not include layoffs, reports the Beijing-based Economic Observer.

ZTE's vice president Shen Li announced his resignation on Weibo on Feb. 17, a move that has again triggered widespread talk of layoffs at the company, the world's fourth-largest mobile phone maker by 2012 unit sales. Over the past year Chinese media has covering what it calls layoffs, though company management denies such claims.

A ZTE employee said that when he joined the company in 1997, the management specifically vowed never to lay off employees, even in difficult times. "We were all so moved at that time," he said.

However, "so many colleagues have left over the past year," he said. "Initially, people leaving would notify other colleagues, or discuss with colleagues about the next step. Later on, there were simply too many people leaving and nobody bothered to mention it any longer. Everybody just got used to it."

Many of the laid-off workers belonged to the R&D department, a troubling sign for a hi-tech company, the report said, citing unnamed ZTE employees.

ZTE declined to admit it laid off 10% of its workforce last year, the report said, explaining that 5% left of their own will, while 5% were those with the lowest performance and part of routine elimination. Its total workforce was reduced by about 9% last year, taking into account new hires, the report said.

The company dismissed internet speculation regarding the vice president's resignation, saying it only reveals the movements of the top 16 executives above the level of senior vice presidents. They did admit however that high-ranking departures can damage company morale, the report said.

"If the company announces pay cuts of 10% when it is in straits, and promised to compensate employees in the future when the situation improves, everyone would have supported the decision," a Mr S said. "But now the company chose to lay off people last year, and plans to do more this year."

Despite the response from its employees, ZTE's move probably is necessary for its survival, the report said.

After reducing its workforce last year, the company aims to strictly control the number of its employees and demand higher efficiency this year, the report said.